Friday, December 20, 2013

Why Kirk-Menendez II is a necessity

Jonathan Schanzer points out what is perhaps the best reason for the new sanctions legislation proposed by Senators Mark Kirk and Robert Menendez: Removing the ambiguity that is leading to a mad rush to invest in Iran.

But, as the Daily Beast's Eli Lake and Josh Rogin
recently reported, the administration's designations have trailed off
significantly in recent months, even though the JPA explicitly allows
for more designations under the existing regime. Indeed, before the
election of Iran's President Hassan Rouhani in June, no less than 183
entities were designated. Following the election of Rouhani, widely
touted as a moderate, there have been only 29 such designations.

In other words, it's highly unlikely that the National Security
Council, State, Treasury and Justice Departments just happened to
approve these most recent designations in the wake of the Geneva deal.
In all probability, they got the coveted interagency thumbs up weeks or
months ago. But the administration likely held off on designating new
entities for fear that rapprochement with Iran was still new and
fragile.

With an angry Congress openly questioning the
administration's will to hold the line on sanctions, these latest
designations were designed to prove a point: that the White House can be
serious about enforcing sanctions while also negotiating their end in a
final nuclear deal.

If that sounds like a fine line to walk, that's because it is.
Actively punishing Iran for its mendacity while trying to selectively
reduce other sanctions (in this case, automotive, petrochemicals and
precious metals) for the sake of diplomacy projects two competing
messages.

It should come as no surprise that this dual approach has inspired
the confidence of neither Iran nor Congress. Indeed, the only actors out
there who are heartened by Washington's conflicted policies are the companies eyeing investments in Iran.
They see confusion, and therefore ambiguity. And that's a whole lot
better than the investment environment of just a few months ago, when
Iran appeared to be completely off limits.

The new Senate bill will the provide Washington with an insurance
policy against Iranian deception. If it passes, it would legislate the
imposition of new sanctions the moment Iran violates the terms of the
interim deal.

That would immediately re-inject fear into the equation and deter
firms looking to cash in on the potential growth opportunities in Iran.
More importantly, it would untangle Washington's impossibly hedged Iran
policy. And though the White House will insist otherwise, it promises to
rearm the administration with the clear leverage that ultimately
brought Iran to the table in the first place.

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About Me

I am an Orthodox Jew - some would even call me 'ultra-Orthodox.' Born in Boston, I was a corporate and securities attorney in New York City for seven years before making aliya to Israel in 1991 (I don't look it but I really am that old :-). I have been happily married to the same woman for thirty-five years, and we have eight children (bli ayin hara) ranging in age from 13 to 33 years and nine grandchildren. Four of our children are married! Before I started blogging I was a heavy contributor on a number of email lists and ran an email list called the Matzav from 2000-2004. You can contact me at: IsraelMatzav at gmail dot com